Tuesday, January 27, 2015

Syriza Is Limited in the Promises It Will Be Able to Keep

by Desmond Lachman

New York Times

January 27, 2015

In the depth of an economic depression, it is perfectly understandable that Greek voters would elect a government committed to reversing the austerity policies that were imposed on Greece from abroad and that have led Greece to an economic and social disaster. But it would be fanciful to think that simply rejecting austerity and insisting on official debt relief will put the Greek economy on course for a sustainable economic recovery. Indeed, such demands risk putting Greece on a collision course with its official paymasters that could very well lead to Greece’s exit from the euro before the year is out.

While it is certainly true that both the Greek government and the German government have every interest in keeping Greece in the euro, both are highly constrained in the concessions that they can grant to make that possible. After several years promising that it would tear up the much reviled International Monetary Fund-European Union memorandum of economic policies for Greece and that it would insist on major official debt relief, it is difficult to see how Syriza can make the large U-turn needed to keep its official creditors happy. This is all the more so the case considering the lavish promises on increased social spending that it made during the electoral campaign.


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